CDFM Working Capital Fund Management 1 — Questions and Answers
Question 1: What is the primary purpose of a Department of Defense Working Capital Fund (WCF)?
- To fund military pay and allowances directly
- To provide a revolving source of financing for goods and services provided to customers (Correct answer)
- To accumulate funds for major weapon system acquisitions
- To finance congressional earmarks for defense programs
Correct answer: To provide a revolving source of financing for goods and services provided to customers
WCFs are revolving funds that finance the cost of goods and services provided to DoD and other customers, with revenues replenishing the fund as charges are collected.
Question 2: Which DoD instruction primarily governs Working Capital Fund financial management policies?
- DoDI 7000.14-R (DoD Financial Management Regulation) (Correct answer)
- DoDI 5000.02 (Operation of the Adaptive Acquisition Framework)
- DoDI 1400.25 (DoD Civilian Personnel Management System)
- DoDI 3000.06 (Combat Support Agencies)
Correct answer: DoDI 7000.14-R (DoD Financial Management Regulation)
DoDI 7000.14-R, the DoD Financial Management Regulation (FMR), Volume 11B specifically addresses WCF policies and procedures.
Question 3: What is a 'stabilized rate' in the context of DoD Working Capital Funds?
- An interest rate set by the Federal Reserve for defense borrowing
- A fixed price charged to customers for an entire fiscal year to provide budget stability (Correct answer)
- A congressionally mandated ceiling on WCF operating costs
- A rate used to calculate depreciation on WCF capital assets
Correct answer: A fixed price charged to customers for an entire fiscal year to provide budget stability
Stabilized rates are prices set at the start of the fiscal year that remain constant, allowing customers to budget reliably without mid-year price fluctuations.
Question 4: Which of the following is a major business area of the Defense-Wide Working Capital Fund?
- Defense Finance and Accounting Service (DFAS) (Correct answer)
- Army Corps of Engineers
- National Guard Bureau
- Joint Chiefs of Staff Directorate
Correct answer: Defense Finance and Accounting Service (DFAS)
DFAS is a Defense Agency activity funded through the Defense-Wide Working Capital Fund, providing finance and accounting services on a reimbursable basis.
Question 5: How are WCF operating results that generate a 'net operating loss' typically addressed?
- They are written off as uncollectible at year-end
- They are covered by a direct supplemental appropriation from Congress
- They are recovered through rate adjustments in future fiscal years (Correct answer)
- They require immediate reprogramming from the Military Personnel appropriation
Correct answer: They are recovered through rate adjustments in future fiscal years
WCF losses are recovered by adjusting stabilized rates in future years so that the fund recoups the deficit over time without needing a separate appropriation.
Question 6: Under DoD WCF policy, what does the term 'cash balance' requirement mean for a business area?
- The business area must maintain zero cash at year-end
- Cash on hand must equal three months of operating expenses
- The fund must maintain sufficient cash to meet current operating needs without a Treasury loan (Correct answer)
- All cash must be deposited with the Federal Reserve within 24 hours
Correct answer: The fund must maintain sufficient cash to meet current operating needs without a Treasury loan
WCF activities are required to maintain adequate cash balances to meet day-to-day operating expenses and obligations without resorting to Treasury borrowing.
Question 7: Which of the following WCF business areas provides depot-level maintenance and repair of military equipment?
- Defense Commissary Agency
- Depot Maintenance Activity Group (Correct answer)
- Defense Logistics Agency Distribution
- Defense Information Systems Agency
Correct answer: Depot Maintenance Activity Group
The Depot Maintenance Activity Group is a WCF business area that performs depot-level maintenance and repair services for military equipment on a reimbursable basis.
CDFM Working Capital Fund Management 1
What is the primary purpose of a Department of Defense Working Capital Fund (WCF)?